What is the pre-opening market session?
The pre-opening market session is the period of trading activity that occurs before the regular market session.
The pre-opening session for the equity cash segment is conducted from 9:00 a.m.-9:15 a.m. to establish ideal opening prices and reduce volatility at the beginning of the trading day. The order collection period (of 8 minutes, from 9:00 a.m.-9:08 a.m.) shall be provided for order entry, modification, and cancellation. At this time, you can place only limit and market orders.
New orders cannot be placed from the closure of the collection window (at 9:08 a.m.) till 9.15 a.m. Any orders placed during this period will be rejected by the exchange. Order matching starts immediately after completion of the order collection period, and trades are confirmed by the exchange. During this session, orders are taken to arrive at the equilibrium price. The matched orders are then executed at this equilibrium price, which translates to the opening price for the day.
They are transferred to the regular trading session based on the order type.
1. Unmatched Limit Orders- Carried over to the regular session at the same price with their original timestamp.
2. Unmatched Market Orders- Carried over to the regular session at the opening price with their original timestamp. If the opening price is not established during the pre-open session, market orders are shifted to the previous day's closing price.
Equilibrium/Opening Price- Price at which the maximum quantity of a stock can be matched with counter-orders. If multiple price points have the same matched quantities, the opening price will be that at which there are fewer unmatched order quantities.